Why Alcoa Stock Lost Momentum This Week
Shares of aluminum giant Alcoa (NYSE: AA) took several weeks to rise by double digits but barely five days to give up most of those gains. I'm referring to Alcoa stock's fall this week -- it was down about 11% for the week as of 10 a.m. ET Friday, according to data provided by S&P Global Market Intelligence, despite opening the last day on a positive note.
Earlier in the week, Alcoa announced it'll curtail production capacity by one-third at its Lista smelter in Norway in the wake of rising energy costs. Elaborating on the event, Alcoa said that while almost 95% of its global smelters source energy under long-term contracts or fixed and self-generating pricing, the remaining -- which primarily constitutes Lista -- rely on spot energy prices. With energy costs rising significantly of late, Alcoa has shut part of Lista for two weeks.
With costs rising, companies like Alcoa require high commodity prices to grow their bottom lines. Unfortunately, prices of aluminum are crashing hard.
Source Fool.com
